Stanford victims not able to file claims: Court

A U.S. appeals court dealt a blow to the victims of Allen Stanford's Ponzi scheme on Friday, ruling that they are not eligible under federal law to file claims seeking compensation for their losses.

The decision by the U.S. Court of Appeals for the District of Columbia Circuit also marks a major loss for the Securitiesand Exchange Commission and is likely to be precedent-setting.

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The SEC was seeking to overturn a lower court's decision from 2012 in which a federal judge rejected a request by the agency to force the Securities Investor Protection Corp (SIPC) to start court proceedings for the fraud victims, some of whom lost millions of dollars.

The law, SIPC argued, limits it to protecting customers against the loss of missing cash or securities in the custody of failing or insolvent SIPC-member brokerage firms.

While Stanford's Texas-based brokerage Stanford Group Company was a SIPC member, its offshore bank was not. SIPC also said it was not chartered by Congress to combat fraud or guarantee an investment's value.

Allen Stanford was convicted of fraud and sentenced in June 2012 to 110 years in prison for bilking investors with fraudulent certificates of deposit issued by Stanford International Bank, his bank in Antigua.

—By Reuters

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